Correlation Between Steelcast and SAL Steel

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Can any of the company-specific risk be diversified away by investing in both Steelcast and SAL Steel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Steelcast and SAL Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steelcast Limited and SAL Steel Limited, you can compare the effects of market volatilities on Steelcast and SAL Steel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Steelcast with a short position of SAL Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steelcast and SAL Steel.

Diversification Opportunities for Steelcast and SAL Steel

SteelcastSALDiversified AwaySteelcastSALDiversified Away100%
-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Steelcast and SAL is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Steelcast Limited and SAL Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAL Steel Limited and Steelcast is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Steelcast Limited are associated (or correlated) with SAL Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAL Steel Limited has no effect on the direction of Steelcast i.e., Steelcast and SAL Steel go up and down completely randomly.

Pair Corralation between Steelcast and SAL Steel

Assuming the 90 days trading horizon Steelcast Limited is expected to generate 0.73 times more return on investment than SAL Steel. However, Steelcast Limited is 1.38 times less risky than SAL Steel. It trades about 0.08 of its potential returns per unit of risk. SAL Steel Limited is currently generating about -0.06 per unit of risk. If you would invest  75,026  in Steelcast Limited on November 19, 2024 and sell it today you would earn a total of  8,839  from holding Steelcast Limited or generate 11.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Steelcast Limited  vs.  SAL Steel Limited

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010
JavaScript chart by amCharts 3.21.15STEELCAS SALSTEEL
       Timeline  
Steelcast Limited 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Steelcast Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Steelcast sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb750800850900
SAL Steel Limited 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days SAL Steel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb192021222324252627

Steelcast and SAL Steel Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.28-6.95-4.62-2.290.02.344.727.099.47 0.0200.0250.0300.0350.0400.045
JavaScript chart by amCharts 3.21.15STEELCAS SALSTEEL
       Returns  

Pair Trading with Steelcast and SAL Steel

The main advantage of trading using opposite Steelcast and SAL Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steelcast position performs unexpectedly, SAL Steel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SAL Steel will offset losses from the drop in SAL Steel's long position.
The idea behind Steelcast Limited and SAL Steel Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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